Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: 1. The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit. 2. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month. 3. The ending finished goods inventory equals 20% of the following month's sales. 4. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound. 5. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month. 6. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours. 7. The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000. The expected cash collections for May is closest to: Multiple Choice . . $950,000 $262,500 $1,022,500 $760,000
Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: 1. The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively. All sales are on credit. 2. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month. 3. The ending finished goods inventory equals 20% of the following month's sales. 4. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound. 5. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month. 6. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours. 7. The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per month is $80,000. The expected cash collections for May is closest to: Multiple Choice . . $950,000 $262,500 $1,022,500 $760,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Michard Corporation makes one product and it provided the following information to help prepare the master budget for
the next four months of operations:
1. The budgeted selling price per unit is $125. Budgeted unit sales for April, May, June, and July are 7,600, 10,500,
13,800, and 12,900 units, respectively. All sales are on credit.
2. Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.
3. The ending finished goods inventory equals 20% of the following month's sales.
4. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of
finished goods requires 4 pounds of raw materials. The raw materials cost $2.00 per pound.
5. Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.
6. The direct labor wage rate is $25.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours.
7. The variable selling and administrative expense per unit sold is $3.40. The fixed selling and administrative expense per
month is $80,000.
The expected cash collections for May is closest to:
Multiple Choice
$950,000
• $262,500
.
$1,022,500
• $760,000
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